Uruguay completes twelve OEDC tax information exchange agreements

Uruguay reached this month a tax information exchange agreement with India thus totalling the twelve demanded by the Organization for Economic and Development Cooperation to have the country de-listed from the group that still have to abide and implement internationally agreed tax standards.

Having effectively agreed and signed twelve TIE agreements is the main request for OEDC to remove a country from the “jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented” and which is most commonly known as the “grey list”.

Uruguay belongs to the grey list since April 2009 when the Group of 20 industrialized nations and emerging countries plus the European Union met in London and decided to “sanction” tax havens that allegedly do not share or exchange information on alleged tax evaders.

Since Uruguay is committed to the agreed international tax standards it will not be sanctioned but will have to remain in the grey list because most of the twelve agreements have been reached at “technical” level and must still be formally signed by both sides.

“Uruguay reached the agreement with India last August 12, a process begun in 2004 but which was delayed because of Uruguay’s 2007 tax reform”, said Alvaro Romano from Treasury.

So far of the twelve, five have been officially formalized: Germany, Mexico, Portugal, Spain and France, and the only so far recognized by OEDC. The other seven, Korea, Finland, Malta, Switzerland, Liechtenstein, India and Belgium have been agreed at “technical level”. Another with Hungary is under review because it does not entirely comply with OEDC conditions.

Three more TIE agreements are in process with Malaysia, Chile and Luxembourg, said Fernando Serra from the Ministry of Economy Tax Advisory Department.

Serra revealed that the Chilean experience was very helpful but Uruguay has no plans to join as a full member of OEDC (as is the case with Chile), “it’s an expensive club to belong to”.

Other countries in the grey list (13) include Guatemala, Costa Rica and the Philippines.

In April 2009 OEDC had 38 countries in the grey list and four in a “black list” where Uruguay had been included allegedly for not collaborating with the international tax standards, which has the main objective of impeding fiscal elusion and evasion. In practical terms it means the elimination of the so called “tax havens”.

However Uruguay presented its case to OEDC and was quickly taken off the black list, and now is working for a similar decision regarding the grey list.

Uruguay has a long tradition of secret bank accounts, which can be lifted following a court order and it is common practice under certain conditions. However the big attraction of such privilege is for Argentines and Brazilians who prefer to have their assets safely deposited in a neighbouring country with a long established and proven political stability and legal security tradition. Conditions, which history shows, are the exception and not the rule in Uruguay’s Mercosur senior partners.